nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2021‒06‒21
nine papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. The Value of Luck in the Labor Market for CEOs By Amore, Mario Daniele; Schwenen, Sebastian
  2. Performance Pay in Insurance Markets: Evidence from Medicare By Michele Fioretti; Hongming Wang
  3. Understanding the Theories and Interventions of Motivation in Organization Development By Marczak, Emily; Yawson, Robert
  4. The glittering prizes: career incentives and bureaucrat performance By Bertrand, Marianne; Burgess, Robin; Chawla, Arunish; Xu, Guo
  5. Politics and Gender in the Executive Suite By Alma Cohen; Moshe Hazan; David Weiss
  6. Gender diversity in corporate boards: Evidence from quota-implied discontinuities By Kuzmina, Olga; Melentyeva, Valentina
  7. Gain and loss framing to encourage effort provision: An experiment By Buckley, P.; Roussillon, B.; Teyssier, S.
  8. Estimating Social Preferences and Gift Exchange with a Piece-Rate Design By DellaVigna, Stefano; List, John; Malmendier, Ulrike M.; Rao, Gautam
  9. CEO Stress, Aging, and Death By Borgschulte, Mark; Guenzel, Marius; Liu, Canyao; Malmendier, Ulrike M.

  1. By: Amore, Mario Daniele; Schwenen, Sebastian
    Abstract: It is well-known that luck increases the compensation of CEOs at their current firm. In this paper, we explore how luck affects CEOs' outside options in the labor market, and the performance of firms that hire lucky CEOs. Our results show that luck at their current firm makes CEOs move to a new firm and be appointed as both CEO and chairman. Lucky CEOs tend to match with firms subject to low analyst coverage and operating in less competitive industries. Moreover, lucky CEOs are able to obtain a higher pay at the new firm (both in absolute terms and compared to new industry peers). Finally, difference-in-differences results show that hiring lucky CEOs hurts firm performance, mostly due to a surge in operating costs and a poorer usage of corporate assets.
    Keywords: CEO Mobility; Compensation; corporate governance; firm performance; luck
    JEL: D86 G34 J33 M12
    Date: 2020–06
  2. By: Michele Fioretti (Département d'économie); Hongming Wang (Hitotsubashi University (HIT-U))
    Abstract: Public procurement bodies increasingly resort to pay-for-performance contracts to promote efficient spending. We show that firm responses to pay-for-performance can widen the inequality in accessing social services. Focusing on the quality bonus payment initiative in Medicare Advantage, we find that higher quality-rated insurers responded to bonus payments by selecting healthier enrollees with premium differences across counties. Selection is profitable because the quality rating fails to adjust for differences in enrollee health. Selection inflated the bonus payments and shifted the supply of high-rated insurance to the healthiest counties, reducing access to lower-priced, higher-rated insurance in the riskiest counties.
    Keywords: Pay-for-Performance; Medicare Advantage,; Risk Selection; Quality Ratings; Health Insurance Access
    JEL: I13 I14 L15
    Date: 2021–05
  3. By: Marczak, Emily; Yawson, Robert
    Abstract: This article reviews theories of motivation in the workplace, what these theories look like in the modern workplace, and interventions designed to increase individual and system-wide organizational motivation. We explored a wide range of theories, including the expectancy theory, Maslow’s hierarchy, the motivation-hygiene theory, the equity theory, reward structures, cognitive evaluation theory, and feedback, to formulate conclusions about common organization development (OD) interventions that are meant to address the theories. Reviewed interventions include; organization structure design, achievement orientation, goal setting, job design, quality feedback, and empowerment programs. We followed a multidisciplinary integrated literature review approach to move beyond merely summarizing the literature but substantially contributing new and valuable knowledge to the fields of leadership and organization development. The research cements the need for understanding individuals’ needs and goals, the value of quality feedback, rewarding positive behavior, leading with fairness, and allowing space for autonomy.
    Keywords: motivation in the workplace, employee engagement, reward, needs hierarchy
    JEL: L2 M0 M1 M12 M52
    Date: 2021–05–18
  4. By: Bertrand, Marianne; Burgess, Robin; Chawla, Arunish; Xu, Guo
    Abstract: Bureaucracies are configured differently to private sector and political organizations. Across a wide range of civil services entry is competitive, promotion is constrained by seniority, jobs are for life and retirement occurs at a fixed age. This implies that older entering officers, who are less likely to attain the glittering prize of reaching the top of the bureaucracy before they retire, may be less motivated to exert effort. Using a nationwide stakeholder survey and rich administrative data on elite civil servants in India we provide evidence that: (i) officers who cannot reach the senior-most positions before they retire are perceived to be less effective and are more likely to be suspended and (ii) this effect is weakened by a reform that extends the retirement age. Together these results suggest that the career incentive of reaching the top of a public organization is a powerful determinant of bureaucrat performance.
    JEL: D73 H11 O10
    Date: 2020–03–01
  5. By: Alma Cohen; Moshe Hazan; David Weiss
    Abstract: Are the political preferences of CEOs associated with the representation and compensation of women in the executive suite? We find that Democratic CEOs (those who contribute more to Democratic candidates) are associated with higher representation of women in the executive suite. To explore causality, we use an event study approach and show that replacing a Republican with a Democratic CEO is associated with 20%-60% in more women in the executive suite. Finally, we show that Democratic CEOs associated with a significant reduction (or even disappearance) of the gender gap in the level and performance-sensitivity of executive pay.
    JEL: G30 J16 J30 M12 M14 M51
    Date: 2021–06
  6. By: Kuzmina, Olga; Melentyeva, Valentina
    Abstract: We use data across European corporate boards to investigate the effects of quota-induced female representation, under minimal possible identification assumptions. We find that having more women in board causally increases Tobin's Q, despite some negative effects on operating performance and more likely employment downsizings. We interpret this evidence as firms scaling down inefficient operations. Our results highlight that gender quotas are not necessarily a costly way of promoting equality.
    Keywords: Gender diversity; Gender quota; Performance; women in boards
    JEL: D22 G32 J16
    Date: 2020–06
  7. By: Buckley, P.; Roussillon, B.; Teyssier, S.
    Abstract: In this paper we compare the impact of a gain framing with a loss framing on a simple and repetitive task. Based on the expectation of higher reference points in the loss framing than in the gain framing, we expected to generate higher effort in the former. Instead, we find no evidence of loss framing effect on participants’ efforts over the experiment. Our results suggest that time pressure on a task kills the loss framing effect. However, experimental sessions without time pressure confirm that the potential effect of loss framing as a nudge is minimal in our context. Nowadays where nudges seem to be the king way for changing behavior we find that monetary incentives are still very powerful to incentive behaviour especially with students.
    JEL: C91 D91
    Date: 2021
  8. By: DellaVigna, Stefano; List, John; Malmendier, Ulrike M.; Rao, Gautam
    Abstract: We design two field experiments to estimate the nature and magnitude of workers' social preferences towards their employers. Unlike previous gift-exchange field experiments, we vary piece rates in addition to gift treatments. This piece-rate design allows us to estimate the elasticity of effort to motivation and in turn identify aspects of the workers' social preferences. The first experiment measures productivity-units of output produced in a fixed amount of time. The second experiment measures a form of labor supply-the willingness to work for extra time. Using the piece-rate treatments, we document that productivity is rather unresponsive to motivation, while labor supply is very responsive. In terms of social preferences, we document, first, that workers provide effort for their employer, but are insensitive to the return to the employer. This result is consistent with models of 'warm glow' or social norms, rather than pure altruism towards the employer. Second, while we do not detect any effect of the gifts in the productivity experiment, we find sizable positive impacts in the labor-supply experiment. We show that, at least in part, this different response to gifts is explained by different elasticities of productivity and labor supply, highlighting the importance of the piece-rate design.
    Date: 2020–06
  9. By: Borgschulte, Mark; Guenzel, Marius; Liu, Canyao; Malmendier, Ulrike M.
    Abstract: We show that increased job demands due to takeover threats and industry crises have significant adverse consequences for managers' long-term health. Using hand-collected data on the dates of birth and death for more than 1,600 CEOs of large, publicly listed U.S. firms, we estimate that CEOs' lifespan increases by around two years when insulated from market discipline via anti-takeover laws. CEOs also stay on the job longer, with no evidence of a compensating differential in the form of lower pay. In a second analysis, we find diminished longevity arising from increases in job demands caused by industry-wide downturns during a CEO's tenure. Finally, we utilize machine-learning age-estimation methods to detect visible signs of aging in pictures of CEOs. We estimate that exposure to a distress shock during the Great Recession increases CEOs' apparent age by roughly one year over the next decade.
    Date: 2020–06

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